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Baucus To Focus On Tax Reform In Next Congress

by Leroy Baker, Tax-News.com, New York

17 December 2008


Despite hints by President-elect Barack Obama that his long-term tax policy objectives have dropped down the agenda in favour of short-term economic stimulus, Senate tax panel chief Sen. Max Baucus announced last week that tax reform would, nevertheless, be given a high priority in the legislative programme of the forthcoming Congressional session.

In a statement, Baucus, the Montana Democrat who chairs the Senate Finance Committee, outlined "priority issues and tasks" for the panel in 2009, at the top of which stands "an aggressive effort to move comprehensive health reform legislation." He also stated that he would focus the committee’s tax efforts on energy, infrastructure, and "general tax reform." Furthermore, a "robust renewal and expansion of Trade Adjustment Assistance" will still top Baucus’s trade agenda in the new Congress.

This year, Baucus led the Committee and the Senate in authorizing rebate checks for millions of Americans, significant Medicare reforms, new energy tax incentives, tax relief for businesses, farmers, and families, alternative minimum tax relief, and a host of other new laws. Baucus also focused much of the Committee’s effort on preparation for enacting comprehensive health reform next year.

"The American people have faced extraordinary economic challenges this year, and the Finance Committee moved to ease the burden with much-needed rebate checks, tax relief for businesses and families, and a focus on health care that will pay huge dividends for American families and America’s economy,” said Baucus.

“I believe the 111th Congress can be a real game-changer for this country if everyone works together to enact real health care reform, energy independence measures and smart tax changes to increase families’ and businesses’ financial stability. And it’s time to take a stand for American workers with better Trade Adjustment Assistance, too," he argued.

It had been expected by tax experts and political commentators that legislation to carry through some of Obama's tax agenda would be one of the first bills to be deliberated by Congress next year. These measures would have included tax relief for low- and middle-income taxpayers, and a host of tax credits to supplement the income of the least well-off families.

Obama has also promised to provide tax incentives to encourage the creation and growth of start-up and small businesses, such as the elimination of capital gains tax for certain small companies. He has also suggested that a long-awaited cut in the rate of US corporate tax may be forthcoming, but only as a lure for multinational companies to retain profits in the US and invest domestically.

However, with jobless figures rising and the economic prognosis worsening by the day, Obama has seemingly decided to spend his way out the recession, having recently outlined plans for a massive cash injection into the nation's infrastructure which some have estimated could top USD1 trillion. Where his tax plans figure into the equation is not so clear.


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